Petroecuador Board Could Approve ITT Contract Model in 2 Weeks

The board of Ecuador's state oil company Petroecuador is expected to approve a mixed-economy contract model to allow private participation in the ITT (Ishpingo-Tambochocha-Tiputini) oilfields in the north of the country within two weeks, ITT project manager Cesár Ruiz told BNamericas.

Petroecuador's board will meet on Thursday morning to discuss the contract model to employ in the ITT tender, among other things, a different Petroecuador spokesperson told BNamericas, confirming local press reports.

If the board, made up of four ministers, agrees on a mixed-economy contract with private companies as partners, it will pass on its recommendation to Petroecuador's tender commission CEL, the spokesperson said.

Petroecuador will have two months to establish the details of the contracts and expects the tender to take place in the middle of this year, Ruiz said.

Mixed-economy contracts would give the state more control over the fields than traditional participation contracts, which gave private companies more freedom, former ITT project manager Jaime Guerra previously told BNamericas.

Investment for the ITT project is estimated at US$2bn, the spokesperson said.

The ITT block has 900 million barrels of proven reserves that have been certified by France's Oil Institute (INP), the spokesperson said.

Studies by INP subsidiary Beicip Franlab in 2004 indicated that production could be up to 190,000 barrels a day (b7d) of 14.7 degrees API crude.

Beicip Franlab suggested two uses for the crude: transporting it to a proposed 85,000b/d refinery on the coast, which would be Ecuador's first heavy crude refinery, for subsequent export of refined products; or burning the oil in a proposed 660MW power plant in the country's eastern region.

The Tiputini area in Ecuador's Yasuni national park in Napo province covers about 200,000ha with reserves of some 2 billion barrels of 14-16 degrees API crude, about a quarter of Ecuador's total reserves.

Petroecuador has been developing the project since 1995 including technical, economic and environmental studies, but the timetable for the tender has been repeatedly delayed over the course of several years.

In 2002 the company considered awarding the contract to a foreign government in the hopes of obtaining more financial support than it might from private companies, according to a previous BNamericas report.

As of 2003, however, France's Total, US-based Chevron, China National Petroleum Corporation (CNPC), the China Petroleum and Chemical Corporation (Sinopec) and Russia's Lukoil were reportedly considering the ITT contract.

Finally, Petroecuador proposed the formation of a public-private contract with a private company in 2004. The idea was criticized by the private sector at the time because energy sector regulations did not allow such a public-private contract and there was not enough information available about the reserves.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports. Click here for a Free two week trial to our Latin America Oil & Gas information service.